Whenever a lottery is established in a jurisdiction (e.g. a state or other governmental entity), a closed network comprising special purpose lottery terminals, communications links, and central site system(s) are installed. In large jurisdictions, the costs of installing this system can be onerous. The closed lottery network/system is extensive with lottery terminals physically placed in every lottery retailer's place of business, a closed communications link (e.g., Virtual Private Network—VPN—over Internet connections, satellite connections, etc.), and a central site. This equipment and closed network/system is typically created, installed, and maintained by a lottery vendor at significant expense. In some lottery jurisdictions (e.g., Florida, New York, California, France, Pennsylvania, etc.), the number of field terminals and associated individual closed network connections can number in the tens of thousands. In fact, it is not unusual for lottery vendors to report a decline in revenue the next fiscal quarter or two after winning a major lottery system contract due to the substantial upfront investment required to manufacture and place the large number of lottery terminals in the field, as well as setup the network.
In addition to the significant costs to the lottery vendor, the lotteries themselves are also burdened with the size and complexity of the closed lottery network/system. Flattening sales curves for lottery products have caused lotteries to search for other forms of revenue, as well as attempting to negotiate smaller and smaller margins from lottery vendors. However, given the significant closed lottery system infrastructure costs, there are limits to the margin reductions offered by vendors.
Finally, lottery retailers themselves are complaining about the size and complexity of the closed lottery system. Retailers frequently complain about the counter space occupied by lottery equipment, product, and supplies as well as the labor-intensive handling of sales and redemptions. Given that retailer margins are typically much lower (i.e., around 5% to 6%) for lottery products than for other items, the retailer's complaints are not without merit.
Therefore, it is desirable to develop secure alternative usages for the closed lottery network/system for other applications. Given the ubiquitous presence of lottery terminals distributed throughout a jurisdiction, these other applications can be unique offering services or features not previously associated with lottery infrastructure. Ideally, these alternative applications could generate revenue for the lottery and/or lottery service provider thereby offsetting the closed network/system costs.